NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Choosing Between Gifts and Bequests: How Taxes Affect the Timing of Wealth Transfers

David Joulfaian

NBER Working Paper No. 11025
Issued in January 2005
NBER Program(s):Public Economics

A number of theories have been advanced to explain the size and timing of intergenerational transfers. One factor only recently explored is the effects of taxes, and in particular the estate tax, on such transfers. This paper represents the first attempt to explore how capital gains and gift taxes, in addition to the estate tax, interact to influence incentives in the timing of transfers. Using estate tax data and exploiting variations in state inheritance, gift, and capital gains tax rates, this paper finds taxes to be an important consideration in the choice between gifts and bequests. In particular, each of capital gains and gift taxes are found to be important determinants of the timing of transfers. These findings are robust to a number of specifications that control for borrowing, charitable bequests, marital status, and the portfolio composition of wealth transfers.

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Document Object Identifier (DOI): 10.3386/w11025

Published: Joulfaian, David. "Choosing Between Gifts And Bequests: How Taxes Affect The Timing Of Wealth Transfers," Journal of Public Economics, 2005, v89(11-12,Dec), 2069-2091. citation courtesy of

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